2012 (10) TMI 1270 - HC - Indian Laws

Summary

1. ISSUES PRESENTED and CONSIDERED

The judgment primarily revolves around the following legal issues:

• Whether the petition under Section 34 of the Arbitration and Conciliation Act, 1996, is maintainable for setting aside a foreign arbitral award when the seat of arbitration is outside India.
• Whether the claims made by NNR Global Logistics were barred by limitation under Indian law or Malaysian law.
• Whether the award of compound interest and costs was justified and consistent with public policy in India.
• Whether the enforcement of the foreign arbitral award is contrary to the public policy of India under Section 48 of the Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Maintainability of the Petition under Section 34

• Relevant Legal Framework and Precedents: The court examined the applicability of Part I of the Arbitration and Conciliation Act, 1996, in light of the Supreme Court's decisions in Bhatia International and Bharat Aluminium Co. v. Kaiser Aluminium Technical Service, Inc.
• Court's Interpretation and Reasoning: The court noted that the decision in Bharat Aluminium Co. would apply prospectively to arbitration agreements executed after 6th September 2012. Therefore, the petition under Section 34 was maintainable for agreements executed before this date.
• Conclusions: The petition by Aargus under Section 34 was maintainable as the arbitration agreement was executed before the prospective application of the Bharat Aluminium Co. decision.

Issue 2: Limitation of NNR's Claims

• Relevant Legal Framework and Precedents: The court considered the Indian Limitation Act, 1963, and the Malaysian Limitation Act, 1953, to determine the applicable law of limitation.
• Court's Interpretation and Reasoning: The court upheld the arbitrator's decision that the limitation law is procedural and thus the Malaysian Limitation Act applied, providing a six-year limitation period.
• Key Evidence and Findings: The court noted that the parties maintained a running account and periodic reconciliation, which influenced the limitation analysis.
• Conclusions: NNR's claims were within the limitation period under Malaysian law.

Issue 3: Award of Compound Interest and Costs

• Relevant Legal Framework and Precedents: The court referred to the Supreme Court's decision in Renusagar Power Co. Ltd. v. General Electric Co. regarding the award of compound interest.
• Court's Interpretation and Reasoning: The court found that the award of compound interest was not opposed to the public policy of India.
• Conclusions: The award of compound interest and costs was justified and consistent with public policy in India.

Issue 4: Enforcement of the Foreign Award

• Relevant Legal Framework and Precedents: The court examined Section 48 of the Arbitration and Conciliation Act, 1996, which deals with the enforcement of foreign awards.
• Court's Interpretation and Reasoning: The court emphasized the discretionary nature of refusing enforcement only when it is contrary to the public policy of India.
• Conclusions: The enforcement of the foreign award was not contrary to the public policy of India, and objections to its enforcement were rejected.

3. SIGNIFICANT HOLDINGS

• Core Principles Established: The judgment reinforced the principle that the law of limitation is procedural and the curial law is determined by the seat of arbitration. It also affirmed the discretionary power of courts in enforcing foreign awards under Section 48.
• Final Determinations on Each Issue:
  
  • The petition under Section 34 was maintainable.
  • NNR's claims were not barred by limitation under Malaysian law.
  • The award of compound interest was justified.
  • The enforcement of the foreign award was not contrary to public policy in India.
  
  

The judgment concluded with the dismissal of O.M.P. No. 201 of 2012 and the rejection of Aargus's objections in O.M.P. No. 61 of 2012, with costs awarded to NNR.